Country Road Group problems widen with unfilled roles as it downsizes to smaller stores and closes others

Struggling fashion house Country Road Group has more than 50 empty roles at its Melbourne HQ, as tough times in fashion forces redundancies and store closures. In a sign of the times, it’s being unseated from its prime mall real estate by a Mecca.

Country Road is struggling amid tough times for fashion retailers. Pictures: Country Road

Country Road Group, the fashion house in the grip of a severe earnings downturn, is yet to fill more than 50 vacant roles at its Melbourne headquarters as cost cuts and store closures plague the iconic casualwear business.

Country Road will leave the ritzy Melbourne suburb of Armadale where its knitwear and branded canvas accessories were once at home, it can be revealed, amid store exits planned for Sydney’s CBD.

The retailer has suffered executive departures, including its former chief executive, Raju Vuppalapati, and the boss of the Country Road label, Elle Roseby. It has pushed through a restructure that’s left more than 50 roles empty while the company claims it is actively recruiting to find new talent.

In March, Woolworths Holdings, the South African owner of Country Road Group whose labels include Mimco, Witchery, Trenery and Politix – declared that Australia was in a “retail recession”.

Country Road Group has 50 empty roles at its Melbourne HQ as it suffers a sales and earnings slump. Picture: Britta Campion

But Country Road Group and its stable of brands have been hit particularly hard, leading it to close its site at the Queen Victoria Building in Sydney and the flagship Sydney store in Pitt Street Mall store when the lease expires in about 2028.

Retail agents relayed tensions between the Johannesburg-listed Country Road Group and its landlords, partly as a result of the indiscriminating approach it adopted in the wake of the pandemic when some landlords treated it more generously.

The closure of the Pitt Street outpost in Sydney’s midmarket fashion strip had been widely speculated in the real estate industry.

While Pitt Street attracts retailers like Sephora, Zara and Uniqlo willing to pay some of the highest rents in the world, the cost-of-living crisis is leaving some players rethinking their prestige leases.

“It’s generally a problem, particularly for those flagships where the rental expectations from landlords have exceeded the capacity for the retailer to pay,” one observer, who declined to be named, said.

Country Road’s Sydney CBD outlet will close in 2028. Picture: Britta Campion

That Country Road Group had benefited from leniency by its private landlord during the pandemic was well known, the observer said.

The same could be said for the QVB site: “Trends come and go - except that Country Road was a hot brand and everybody wanted it. They’re not as relevant now as they used to be,” one agent said.

He added that some chains were rationalising after a period of trying to grow store count rapidly.

“Increasingly if a store’s not meeting its hurdles, and they don’t need to have it for the sake of having the store, if it’s not making money, they close it.”

Country Road Group is moving to a smaller tenancy in the Miranda mall in Sydney’s south where its present square footage is being taken over by the favourite tenant of commercial property landlords across Australia, Jo Horgan’s Mecca.

“Middle ground in suburbia is challenging and hard and so a lot of landlords are trying to push their mix up-market,” a property executive said. “Trying to be a fashion retailer is like picking the winner at the local horse race.”

The closure of the Pitt Street outpost in Sydney’s midmarket fashion strip had been widely speculated in the real estate industry.

A spokeswoman for Country Road Group told The Australian there would be store openings to come this year, although that included the benefit of stores currently closed for refurbishment.

“From time to time, we review our retail store portfolio to ensure we’re continuing to meet the needs of our customers. We are committed to delivering great experiences throughout our networks and we are investing in our stores, with 10 new or refurbished stores opening by the end of the year.

“This includes our beautifully renovated Mosman store reopening in September, a new Country Road flagship store in Queen Street, Brisbane opening in August and three new stores opening in Chatswood Chase in October.”

Vicinity Centres-owned Chatswood Chase has been under site-wide redevelopment.

Earlier this year Woolworths Holdings chief executive Roy Bagattini said he believed the Country Road Group fashion and apparel business could be saved despite barely being profitable and crashing sales in January.

“This is absolutely fixable,” he told analysts.

Country Road Group’s interim result showed earnings down almost 72 per cent at $14.2m, but adjusted profit before tax sunk 94 per cent to a wafer-thin $2.5m, it reported in March.

Originally published as Country Road Group problems widen with unfilled roles as it downsizes to smaller stores and closes others